Hiring in Luxembourg: Employer Costs, Labor Laws and How to Hire
Employers in Luxembourg pay 12.57% to 15.00% of gross pay in social security in 2026, depending on the company's absenteeism class. The employee pays 12.95%. On a €70,000 salary, the employer's cost is €78,799 to €80,500 a year.
Hiring someone in Luxembourg? This guide covers what an employee costs, social security contributions, the labor rules that apply, the social minimum wage, income tax, work permits and the ways a company outside Luxembourg can employ someone there.
Social security contributions in Luxembourg, 2026
Key employment rules in Luxembourg
How to hire in Luxembourg
Hiring in Luxembourg comes down to two decisions: who you hire, and how you employ them.
- Find the person. Write the role, set the salary against Luxembourg pay levels and any sector collective agreement, then source and interview candidates. You can run the search yourself with a job post, or use a placement service that delivers a shortlist.
- Choose how to employ them. A Luxembourg entity running payroll, an employer of record or a contractor agreement. Each option is explained below.
- Make the offer. The contract has to meet the rules in the employment table above, including the trial period limits and the social minimum wage.
Your options for employing someone in Luxembourg
- Luxembourg entity: you register as an employer with the Joint Social Security Center (CCSS), run payroll and pay the employer's contributions yourself. It suits a team of several people in Luxembourg.
- Employer of record (EOR): a third-party provider becomes the legal employer and runs Luxembourg payroll for a monthly fee per employee. Your company directs the work.
- Contractor: the person invoices you as a self-employed worker. The relationship has to be genuinely independent, or it can count as employment.
Euro Remote Talent does not employ people on your behalf. We handle the placement: we find and shortlist the candidate, and you employ them through the route that fits.
What an employee costs in Luxembourg
Take an employee paid €70,000 gross a year in 2026. The employer pays 2.80% and 0.25% for health insurance, 8.50% for pensions, 0.65% for accident insurance at the base rate and 0.14% for health at work. On top comes the employers' mutual insurance (Mutualité des employeurs). Its rate goes from 0.23% to 2.66%, set by the company's absenteeism class.
- Lowest class: €70,000 x 12.57% = €8,799, for a total cost of €78,799 a year
- Highest class: €70,000 x 15.00% = €10,500, for a total cost of €80,500 a year
The employee pays 11.55%, or €8,085, for health and pensions, plus 1.40% long-term care insurance on gross pay after an allowance of a quarter of the minimum wage. The employer withholds both from pay. Contributions stop at a ceiling of 5 times the social minimum wage a month. The accident insurance rate can move between 0.5525% and 0.9750% with the company's bonus-malus factor.
Minimum wage and pay
Luxembourg's social minimum wage is €2,771.33 gross a month from 1 June 2026 for unqualified workers aged 18 and over, or €16.0192 an hour. Qualified workers get 20% more, €3,325.59 a month. All wages, not only the minimum, rise with the index when the cost of living moves 2.5%; the last step was on 1 June 2026. The government has proposed a 3.8% rise to €2,876.60 from 1 January 2027 in a bill that Parliament still has to pass. See our Luxembourg minimum wage and Luxembourg public holidays 2027 pages.
Income tax in Luxembourg
The employer withholds income tax from each salary payment, using the employee's tax card, and pays it to the Inland Revenue (ACD). The tax is progressive, from 0% to 42%. The table below is the ACD base tariff from tax year 2025, for a single person in tax class 1. Other tax classes and surcharges change the final amount. A bill before Parliament would adjust the brackets for indexation from 2027.
| Taxable income a year, class 1, base tariff from tax year 2025 | Rate |
|---|---|
| Up to €13,230 | 0% |
| €13,230 to €15,435 | 8% |
| €15,435 to €17,640 | 9% |
| €17,640 to €19,845 | 10% |
| €19,845 to €22,050 | 11% |
| €22,050 to €24,255 | 12% |
| €24,255 to €26,550 | 14% |
| €26,550 to €28,845 | 16% |
| €28,845 to €31,140 | 18% |
| €31,140 to €33,435 | 20% |
| €33,435 to €35,730 | 22% |
| €35,730 to €38,025 | 24% |
| €38,025 to €40,320 | 26% |
| €40,320 to €42,615 | 28% |
| €42,615 to €44,910 | 30% |
| €44,910 to €47,205 | 32% |
| €47,205 to €49,500 | 34% |
| €49,500 to €51,795 | 36% |
| €51,795 to €54,090 | 38% |
| €54,090 to €117,450 | 39% |
| €117,450 to €176,160 | 40% |
| €176,160 to €234,870 | 41% |
| Over €234,870 | 42% |
Work visas
- EU Blue Card: a residence permit for highly qualified workers from outside the EU. The salary threshold is set at the average gross annual salary in Luxembourg, the job contract must run at least 6 months, and the holder gets free access to the job market after 12 months.
How Euro Remote Talent can help
We do placement. We source, screen and interview remote professionals across Europe, then deliver a shortlist of 3 candidates within 21 days for a flat $6,500, or your deposit back. Prefer to run the search yourself? Post a job for $299 and reach candidates who want to work remotely.
See how placement works, post a job or book a 30-minute call. Browse remote jobs in Luxembourg to see who is hiring there now.
This is general information, not legal or tax advice. Rules change and collective agreements can set different terms. Confirm with a local accountant or lawyer before you hire.
Frequently asked questions
How much does an employer pay in social security in Luxembourg?
12.57% to 15.00% of gross pay in 2026. The fixed part is health insurance, pensions, accident insurance at the base rate and health at work. The employers' mutual insurance adds 0.23% to 2.66%, set by the company's absenteeism class.
What does a €70,000 salary cost a Luxembourg employer?
Between €78,799 and €80,500 a year. Employer contributions add €8,799 at 12.57% or €10,500 at 15.00%.
How long can a trial period be in Luxembourg?
At least 2 weeks. The maximum is 3 months for an employee without a vocational diploma (CATP/DAP) or equivalent, 6 months with one or higher training, and 12 months for pay above a level set by law.
How much notice must a Luxembourg employer give?
2 months for an employee with under 5 years of service, 4 months from 5 to under 10 years and 6 months from 10 years. From 5 years of service, severance pay is also due.
Can a company outside Luxembourg hire someone there without a local entity?
Yes. The usual routes are an employer of record, a third-party provider that employs the person for you, or a genuine contractor agreement. Euro Remote Talent handles the placement: we find, screen and shortlist the person, and you choose the route.
Sources
- CCSS, Avis aux employeurs, taux de cotisation au 1er janvier 2026. Checked 3 Nov 2026.
- ITM, Salaires: salaire social minimum au 1er juin 2026. Checked 3 Nov 2026.
- Ministry of Health and Social Security, Paramètres sociaux au 1er juin 2026. Checked 3 Nov 2026.
- Government of Luxembourg, Résumé des travaux du 2 octobre 2026. Checked 3 Nov 2026.
- Guichet.lu, Organising working time. Checked 3 Nov 2026.
- Guichet.lu, Annual paid leave. Checked 3 Nov 2026.
- Guichet.lu, Working on public holidays. Checked 3 Nov 2026.
- Guichet.lu, Permanent employment contract. Checked 3 Nov 2026.
- Guichet.lu, Dismissal with notice. Checked 3 Nov 2026.
- ACD, Tarif de base applicable aux personnes physiques (base tariff from tax year 2025). Checked 3 Nov 2026.
- Guichet.lu, News about the EU Blue Card. Checked 3 Nov 2026.
